425: Berry Global and Glatfelter Achieve Key Regulatory Milestone in Proposed Merger

Berry Global and Glatfelter announce they have received all required regulatory approvals for the spin-off and merger of Berry's Health, Hygiene and Specialties Global Nonwovens and Films business with Glatfelter.

Summary

• Berry Global Group, Inc. and Glatfelter Corporation have achieved an additional regulatory milestone for the proposed transaction involving the combination of Berry's Health, Hygiene and Specialties segment (HHNF) with Glatfelter.
• The companies have received all necessary approvals and clearances under competition and foreign direct investment laws.
• This is in addition to the previously announced expiration of the Hart-Scott-Rodino (HSR) Antitrust Improvements Act waiting period.
• The transaction, structured as a Reverse Morris Trust, was initially announced on February 7, 2024.
• The deal is expected to close in the second half of calendar 2024, pending Glatfelter shareholder approval and customary closing conditions.
• The combined company will be a publicly-traded entity in the specialty materials industry.
• Glatfelter's 2023 revenue was $1.4 billion with approximately 2,980 employees worldwide.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as a key regulatory milestone has been achieved, increasing the likelihood of the merger's completion. However, risks and uncertainties remain, such as shareholder approval and integration challenges.

Positives

• All required regulatory approvals have been received, reducing uncertainty around the deal's completion.
• The Reverse Morris Trust structure offers potential tax advantages.
• The combined company is expected to be a leader in the specialty materials industry.
• The transaction is still expected to close in the second half of 2024.

Negatives

• The transaction is still subject to Glatfelter shareholder approval, which introduces some uncertainty.
• The deal is subject to customary closing conditions, which could potentially delay or prevent the transaction from closing.

Risks

• Glatfelter shareholders may not approve the transaction.
• The anticipated tax treatment of the proposed transaction may not be obtained.
• Potential litigation could arise in connection with the proposed transaction.
• Unexpected costs, charges, or expenses could result from the proposed transaction.
• The integration of the combined company could be more difficult, time-consuming, or costly than expected.
• The announcement, pendency, or completion of the proposed transaction could affect the parties' ability to retain customers and key personnel.

Future Outlook

The transaction is expected to close in the second half of calendar 2024, subject to Glatfelter shareholder approval and customary closing conditions. The combined company will be a leading, publicly-traded company in the specialty materials industry.

Industry Context

This merger reflects a trend of consolidation in the specialty materials industry, as companies seek to gain scale and improve their competitive positioning. The combined entity will likely aim to leverage synergies and expand its market reach.

Comparison to Industry Standards

• Similar transactions in the specialty materials industry, such as the merger of equals between Hexcel and Woodward, have aimed to create larger, more diversified players.
• The Reverse Morris Trust structure is a relatively common method for tax-efficient spin-offs and mergers, as seen in transactions involving companies like Leidos and Lockheed Martin.
• Glatfelter's revenue of $1.4 billion places it in the mid-tier of specialty materials companies, while Berry Global is a much larger player with a broader portfolio.

Management Changes

Stakeholder Impact

• Shareholders of Glatfelter will have the opportunity to vote on the proposed transaction.
• Employees of both Berry's HHNF business and Glatfelter may experience changes as a result of the integration.
• Customers of both companies may benefit from a broader product portfolio and enhanced capabilities.
• The combined company will aim to create value for its stakeholders through synergies and growth opportunities.

Next Steps

• Glatfelter shareholder vote on the proposed transaction.
• Completion of customary closing conditions.
• Integration of Berry's HHNF business with Glatfelter.

Key Dates